Jewel markets itself as an alternative to traditional cigarettes and the ecigarette giant says its mission is to improve the lives of the world's 1 billion adult smokers it's not only former smokers that you're converting there's been a huge surge of high schoolers using ecigarettes or vaping the FDA calls it an epidemic Children's Hospital in Wisconsin is sounding an alarm about serious health problems linked to vaping you're nothing but a marketer of a poison and your tarant has been young people you initially think you're saving the world and then all of a sudden like people are
saying no you're the [Music] devil in 2018 juwel was a $38 billion company with an ambitious mission to give the world's 1 billion cigarette smokers a better healthier alternative but just 5 years later Jewel's value had plummeted 95% below its peak and its mission statement now had an extra sentence to combat underage usage of their products because despite juul's good intentions they got millions of underage kids addicted and created a whole new generation of smokers this is the story of two young entrepreneurs who set out to destroy big tobacco but who ultimately ended up becoming
big tobacco so get ready because the rise and fall of juel is going to be a wild [Music] ride in 2004 two product design students called Adam Bowen and James mon crossed paths at Stanford University Stanford had banned smoking on campus over decade ago so during late nights in the design studio Adam and James snuck out for a smoke break and because they were both obsessed with design they looked at their cigarettes and wondered if they could somehow be improved with technology they realized the reason many smokers couldn't quit despite the obvious health risks was
because they missed the rituals associated with smoking so Adam and James teamed up to design a product that kept the relaxing social and fun elements of smoking but removed the most harmful aspects whilst doing research for their idea Adam and James stumbled upon something fascinating they uncovered thousands of emails business plans product research and scientific studies which revealed that big tobacco had secretly been playing with the idea of a safer cigarette since the early 1950s for big tobacco it wasn't ideal that their product kills their customers so they tried to make a cigarette that was
just as addictive but didn't cause cancer they found found that by heating the tobacco inside cigarettes into a vapor the mix of chemicals produced in the Smoke was less toxic than if they were to burn the tobacco completely the research was promising but big tobacco had run into a dilemma introducing a safer cigarette basically meant admitting that all regular cigarettes were unsafe So to avoid destroying their own industry they didn't release any products with this technology for decades but Adam and James now picked up where big tobacco left off and decided to start their own
business to work on this there were 1 billion cigarette smokers in the world and so Adam and James figured this was not only a way they could make obscene amounts of money but also a way to save lives what could go wrong after graduating Adam and James started their company which they initially called plume the company's mission was to save a billion lives so they genuinely believed that they were the good guys and that big tobacco was the Enemy by mid 2007 plume had secured $400,000 in funding from investors more than enough to hire employees
and build a prototype but from the start they ran into several issues firstly the early prototypes of the plume were faulty and one of them exploded inside the office and secondly it seemed like Adam and James's idea for a safer cigarette had competition similar products were already coming to the market the first ecigarette to get any real attention was called enjoy and soon The Vaping industry was taking flight but Adam and James weren't too worried by the competition most Vapes were big tacky and complicated to use whereas Adam and James were design Geeks and put
a lot of thought into the product design and so when the plume was ready to share p in 2009 it was a pretty Sleek looking product unfortunately as good as the plume looked in practice it had lots of issues it still shocked or burned people sometimes and to fuel it you had to manually fill a cartridge with butane which is basically lighter fluid so it was highly flammable in other words it was complicated and dangerous and not just that people would often tape two plumes together just to get a higher nicotine dose which was a
clear sign that the product wasn't doing it job very well it simply wasn't as satisfying as a cigarette so basically smokers thought the plume was interesting but it wasn't going to change the world to Adam and James the plume's failure was devastating they had worked on it for years with relatively little success and thus the company was now in crisis they came to the depressing realization they needed to start over from scratch and that would lead to a new product that they would call the jewel to become successful the jewel needed to improve on both
major aspects of the plume design and Engineering so on the design side James focused on making the jewel a tech product it had to be subtle minimalistic and intuitively easy to use to achieve that he gave the jeel a modern design with just two parts a body and a pod because of the way these were shaped everyone instantly knew exactly how they fit together over on the engineering side Adam focused on solving the fundamental problem of user satisfaction you see the jewel had to be strong enough to satisfy cigarette smokers but currently that was impossible
the pure nicotine which was added to vape liquids is naturally bitter so if Adam matched the nicotine content of a cigarette The Taste was intolerable but then Adam discovered tobacco industry research on nitin salts which dampen the taste of nicotine burn the throat much less and can be loaded with pretty much any flavoring because of this Adam could amp up an e-i liquid's nicotine content to the point where it was actually stronger than a cigarette smoother and tasted of something nice like mango or cremet and so as Adam and James reflected on the new product
they'd made they realized they'd done something remarkable they had essentially reinvented smoking you see before the jewel the cigarette was the Holy Grail of all products not only are they easy and cheap to manufacture but the nicotine inside can be as addictive as heroin so you normally have a customer for life but of course the Fatal floor of cigarettes was the health impact on their customers however since Jewel didn't contain tobacco people generally believed the jewel was a safer alternative to cigarettes and from a business perspective the jewel could be an even more lucrative product
whilst the jewel kept all the positive aspects people associated with cigarettes nicotine were far more powerful than tobacco so it was even more addictive plus a jewel could also be used indoors without leaving a horrible smell behind and whil cigarettes burn out a jewel could be pulled out and put away instantly meaning people could smoke anywhere all day if they wanted to and not just that the jewel was cool it had a bunch of flavors and it looked like something Apple would make in fact people later called it the iPhone of ecigarettes so naturally Adam
and James were incredibly excited about the jewel this was it this is how they were going to Save A Billion Lives all they had to do now was prepare their launch campaign because they only had one shot at it if the campaign flopped they wouldn't get a second chance but if they got it right juel could genuinely change the world now the FDA had a strict set of regulations for tobacco products but the jewel didn't have any tobacco in it so whereas traditional cigarettes were extremely restricted in how they could advertise Jew is free to
advertise without any real over or regulation and so to kick their launch campaign off Adam and James hired Richard mumby an influencer who specialized in lifestyle advertising and this is where things started to go horribly wrong Adam and James created juel to help people quit cigarettes but juul's new mark team thought the best way to advertise the product was to make it look cool and the best way to do that was to get it in the hands of as many young people as possible the result was a huge social media marketing campaign called # vaporized
which was filled with colorfully dressed healthy dancing Millennials jewes marketing was eerily similar to what tobacco companies had done many years ago to get new generations hooked on their product get young people dancing and having a good time but whereas tobacco companies couldn't advertise on TV or Billboards anymore due to regulation juel could The Regulators hadn't caught up yet for the product launch juel hosted influencer parties where thousands of jws were given away it's a classic dealer tactic the first one is free to get you hooked and sure enough Joel gave out plenty of free
samples to popular influencers who could help promote it it seemed like juel had totally forgotten its original Mission of helping people quit cigarettes and instead the marketing team would just trying to get as many new customers as possible the ads weren't targeted at smokers trying to quit it was targeted at young people wanting to look cool it's even reported Joel took out ads on Nickelodeon and Cartoon Network literally websites for kids and they sold their products online without any age verification the tragedy was JW's product genuinely could help smokers quit cigarettes but the marketing was
instead reaching millions of teenagers who'd never even smoked before and had no intention of doing so until they heard about jeel however after the jewel officially launched in 2016 the FDA hit them with some news that changed everything to make up for their lack of regulation on ecigarette products the FDA announced any new products would need to go through a series of extensive checks before being released any existing products on the market could continue selling for 2 more years but to make even the slightest modification they would have to go through these new FDA checks
which could take years this put Adam and James in a desperate position because their product still had some major issues since the jewel was so compact the liquid inside the pods often sprayed out when people took a puff which was painful and dangerous so if they didn't fix their product it was never going to catch on already some shops had stopped selling the jewel due to this issue but because of the fda's new rules juel were unable to make any modifications to their product without going through these extensive FDA checks so juel decided to re-engineer
the pods without telling the FDA now they were hiding a secret but once they were able to improve the product in early 2016 juel was still bleeding money and so the board decided to remove James as CEO this turned out to be premature as summer got underway s started picking up then they picked up even more more and then they skyrocketed it turns out the vaporized marketing campaign had been incredibly effective but since it was largely based on Word of Mouth it had just taken a little time for juel to spread around the country and
as juel had now secretly improved their product by early 2017 social media was filled with celebrities and influencers using Jews which was the perfect marketing to make it look cool so Joel started hiring hundreds of new employees and expanding to other countries juel was now growing so fast that by the end of the year it was the fastest company ever to reach a 10 billion valuation four times faster than Facebook however as the months went by juwel started realizing the real reason for the large number of sales the majority of new jeel users were actually
non-smokers who'd now got hooked on nicotine and many of them were teenagers and then worrying posts started popping up I started having the Cravings more more often I am definitely so addicted to vaping and it wasn't this feeling of oh I really want nicotine we need it before 2017 nicotine products were pretty uncommon among miners cigarettes were mostly seen as gross by younger generations and weren't being used as much but Jewels marketing had made smoking popular again and their many different flavors were an irresistible introduction to smoking for many teens some kids thought they were
just smoking water vapor but in real reality one Jewel pod contained about as much nicotine as 20 cigarettes so it was even more addictive than cigarettes plus because ecigarettes didn't have as many restrictions you'd see people Vape in bars and clubs people who may have gone out for an occasional cigarette could now smoke constantly at home as it didn't smell and since the jewel was easy to conceal it became a perfect way for middle school and high school kids to vape without getting caught kids would literally use them in class under their desks and charge
their Jewels openly from their computer as it just looked like a USB drive plus with cigarettes you get to the end and stop but with Jewel the only stop signal is getting to the end of the pod which is the nicotine equivalent of an entire pack of cigarettes so people were smoking far more you had 15-year-old kids doing the Vape equivalent of chain smoking several packs a day and more and more kids started using it I became so addicted to vaping that it really took over my everything I I was even a gymnast and I
remember not having enough energy to do the things I needed to do the proportion of high school teenagers using ecigarettes has reached nothing short of an epidemic level research suggests nicotine is dangerous for developing brain and can have lifelong effects not to mention links to depression and anxiety but teens didn't even realized they were getting addicted it was only when they tried to quit that they noticed they didn't feel good if they didn't smoke in response to this Joel then pulled another move out of the big tobacco Playbook they went into schools to warn kids
about vaping but this was really a wolf in sheep's clothing because of course if you tell kids they shouldn't do something it plants the idea they want to do it and rebel and several students said that when the jewel Representatives came to their school it felt a bit like a sales pitch in Disguise and things were about to get worse do you want to create videos like this if so you're going to want to know about today's sponsor story blocks I've been using story blocks for years now as they have over a million video clips
templates songs sound effects and more so let's say you want to create a smoke effect well you just type smoke in their search box and instantly get different clips and templates to choose from then let's say you want some dark music you can just filter their songs by mood and download the perfect track and because all story blocks downloads are 100% royaltyfree you don't have to worry about copyright claims or getting demonetized but here's why I really love story blocks normally with stock footage you have to pay for every single clip but with a story
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when they fa their next challenge the two years since the FDA made their first push towards regulating ecigarettes were coming to an end and now juel had to undergo a process where they essentially had to prove their product was a net public health benefit to the United States given that millions of kids were getting addicted to Jewels at the time they would have a hard time proving that was the case a report came out claiming an 80% increase in Vape use in high schools and almost a 60% increase in middle schools more than 3 million
high school students had had taken up the Habit so around one in every five high school students was vaping and juel was by far the most popular brand so the FDA sprung into action and forced juel to provide their internal documents for review around this time juel also drew the attention of Altria the biggest cigarette manufacturer in the US in the first quarter of 2018 cigarette sales had fallen more than what alria models suggested they should have and they blame this exclusively on Jewel replacing cigarett whilst Altria had launched its only cigarette Jewel sales were
far ahead of them and doubling every 3 months Altria considered this a genuine threat to their entire business but as the pressure on Jewel intensified due to the negative media retention and the FDA review the company was in a vulnerable position and Altria saw this as an opportunity they figured if you can't beat them buy them so in December 2018 alria Executives met with juul executives rumors began circulating around the company and on the 20th of December it was officially announced Altria was buying a 35% stake in Jewel in exchange for a 122.8 billion investment
valuing the company at over 38 billion thanks to the stock they owned juwes Founders Adam and James became billionaires overnight but all the jewel employees were thinking the exact same thing they were now working for the enemy a big chunk of the company was now own by big tobacco the very industry they'd supposedly been trying to destroy the original Dream of Jewel was dead hey Legends it's John here creator of magnates media just wanted to quickly share some exciting news with you so for those who don't know magnate media is not some big company I
literally started this channel by myself from my bedroom making terrible videos I couldn't even afford a tripod so I had a camera on some books which is why the angle was a bit slanted so I couldn't have imagined I'd be where I am now because now I get to make videos about whatever topics I find interesting and I can do it from anywhere in the world as I don't have to be on camera anymore and I have a small team to help me which means we can get super creative with the videos like experimenting with
3D and crazy animations it's like running your own mini Film Studio where you can make whatever you want however the problem is it took me years to figure all this out like how the algorithm Works how to hire the people how to get big sponsors and make more money all this stuff that creators never publicly talk about so that's why I spent months and months putting everything I've learned into a simple system that anyone else can follow for example if you wanted to run your own channel about True Crime history Tech Finance Sports whatever it
is you're interested in you can just follow the system I've created I literally show you everything you need to make a full-time income from YouTube and all the behind the-scenes secrets of how I make the videos and how I grew the channel from zero to over 1.6 million subscribers and when you sign up you'll also get access to a community of other creators like we already have successful channels who've gone through the program who you can connect with plus I'm in the community myself answering questions so you can literally ask me anything you want so
you never feel stuck honestly this is the system I wish I had had when I started out as it would have saved me years of expensive and timec consuming mistakes so if you've ever wanted to grow your own YouTube channel this system is perfect for you just click the link in the description below to claim one of the remaining spaces or go to magnet. medsystem and I'll chat with you inside the community in just a [Music] minute the FDA made a discovery in the documents juel provided for them not only had juel in intentionally targeted
nonsmokers in their initial marketing campaign but they hadn't even been able to get concrete evidence from many of the health claims about the benefits of vaping over smoking as a result Congress asked James to testify under oath and the hearing was an embarrassment to Joel you sir are an example to me of the worst of the Bay Area you don't ask for permission you ask for forgiveness you're nothing but a marketer of a poison and your target has been young people and then as Jew was nearing its Breaking Point the worst possible thing that could
have happened happened a high school student collapsing after vaping and was rushed to the hospital it took 2 days for my lungs to fail and I almost died number of deaths linked to vaping Rising today my chest felt like it was collapsing and tightening up and I couldn't breathe in July 2019 hospitals around the US started reporting multiple cases of teenagers with eerily similar symptoms throat pain chest pain lung damage respirat failure and lung collapse 6 to8 teenagers tragically passed away and among every patient they all had one thing in common they were all Heavy
Vapors as news of this spread social media was filled with people destroying their Jews protesters gathered around their office and juw sales immediately nose dived now despite the Panic juwel wasn't really at fault here the hospitalizations were actually caused by Black Market cannabis fape oils diluted with vitamin E acetate so the problem was that people were using the jewel device but not the official Jewel pods but regardless all eyes were on Jewel because of the Teen vaping epidemic so they took the public beating for this tragedy the Centers for Disease Control took a very public
stance against vaping and individual states hit Joel with a barrage of lawsuits threatening to take all flavored Products off the market Joel has never been able to recover from this event both of the original Founders resigned and all major positions jeel was soon filled by big tobacco Executives any remaining members of the original Jewel team were completely demoralized they joined this company for an important Mission and now it felt like juel had been completely taken over by big tobacco in fact much of the entire ecigarette Market was captured by tobacco companies in 2022 the FDA
rejected ju's application trying to prove that their product was a net public health benefit and asked them to take juel off the market but was able to appeal the decision since then though juel has settled thousands of lawsuits and had to pay close to 3 billion in fines and juul's valuation fell to around 450 million 95% down from its peak whilst the peak of the Teen vaping epidemic was in 2019 newer brands have capitalized on this new generation of smokers and they've used many of juul's tactics like using fun sounding flavors influencer marketing and avoiding
regulation through new technologies like syn itic nicotine since this is all relatively new we still don't really know the long-term effects of Jewel and vaping yet Jewel's CEO even openly admitted that but amongst teenagers there's understandably frustration one user said I'm unfortunately a genen z who grew up never wanting to smoke but in high school everyone was vaping I'm also very angry because at the time I started vaping I was told it was completely harmless and it was basically inhaling water vapor My Generation got so screwed we were so close to becoming a mostly smokefree
generation and companies like jeel partnering with big tobacco ruin this for us however to this day the Public Health Community is still massively divided on the issue of vaping because on one hand juwel really was helping cigarette smokers quit Vapes contained only a tiny fraction of the carens found in cigarettes and there were plenty of people who made the switch from cigarettes to Jewel and were better off for it as it helped them cut out tobacco but was it's certainly possible cigarette smokers might be better off vaping from a health perspective there's also no denying
that Jaws were much more addictive than cigarettes and the millions of people who would have never smoked in the first place only started because of jaw millions of miners are now addicted to ecigarettes so some feel that by making it so appealing to teenagers they undid much of the progress that had been made on cutting down on smoking amongst younger Generations whilst move fast and break things is a popular mantra for tech companies when it comes to health juwel is a case study and how you actually can move too fast and then may never recover
so when it comes to Jules Legacy there's both good and bad but one thing that's clear about this story is that ever since the 1950s big tobacco wanted to create a product that was just as addictive as a cigarette but didn't kill its customers we also note that in 2007 when juel started it looked like big tobacco was running out of new Young customers or as they called them replacement smokers ironically juel actually solved both of these problems for them they created a less dangerous and more addictive product than a cigarette and they hooked yet
another generation on nicotine so in the end did jel just do big tobacco's dirty work for them I hope you found the story of juel interesting but if you want an even more controversial business story go check out this video right here I'll see you there in a second cheers
